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What Should Investors Think About Tesla's Panasonic Pause?

By Motley Fool Staff - Updated Apr 22, 2019 at 1:50PM

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The two companies are freezing plans to expand the Nevada Gigafactory. Should investors be worried?

Tesla (TSLA 5.71%) and Panasonic are suspending investment to expand the Gigafactory, the massive Nevada facility that was supposed to feed the automaker's ever-growing demand for battery cells.

In this segment of Industry Focus: Energy, Motley Fool's Nick Sciple and contributor Lou Whiteman discuss the ramifications of the move and how investors should react to this latest Tesla headline.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on April 11, 2019.

Nick Sciple: I follow you on Twitter. You like to talk about Tesla a little bit. We've got a little bit of Tesla news today. Today, news came out that Tesla and Panasonic have agreed to cease further expansions of the Gigafactory. What's your reaction to that, as someone who likes to follow Tesla in their free time?

Lou Whiteman: It's hard to spin this well. Either they don't have the money to do it or the demand isn't there. And so much of the stock's valuation is based on the expected growth in the company and deliveries. Even in the best case, that they have the money and they could expand this factory if they wanted to, it implies it's not the lowest-cost option or they don't have the need for all those batteries.

At this point...we'll see what happens with it, but I don't think anyone can say down the line there were no signs, let's just put it that way.

Sciple: Yeah, the hits keep on coming for Tesla these days. We'll see how it plays out. They do have the Chinese Gigafactory, trying to get up and running. They do have a different battery agreement there with a different supplier. We'll see if that works out. But, again, the hits keep on coming.

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